Thank You

Error.

Forecasting the Dow Jones Industrial Average can be dangerous work. Just ask James Glassman and Kevin Hassett, authors of Dow 36,000, published in 1999 with the hopeful subtitle "The New Strategy for Profiting from the Coming Rise in the Stock Market." We're still waiting.

Rally Ho! A Bernstein Global Wealth strategist sees the Dow industrials reaching 20,000 in five years, or maybe 10.
William Waitzman for Barron's

Masters assumes S&P 500 companies will grow earnings 6% annually, slightly below the 7% long-term average, and that the market's earnings multiple will rise slightly, to 15, still below the long-term average of 17.5. Under those conditions, he sees the Standard & Poor's 500 rallying to 2,000, while the Dow, which typically trades at 10 times the S&P, would rise to 20,000, for a 9% annual return.

Even under less salubrious conditions, he sees the Dow hitting 20,000 in 10 years. "Under a lot of scenarios, you still get to Dow 20,000 in a reasonable period of time," he says. "You need unbelievably harsh scenarios not to get there. Five years from now, you're going to look back and say today was just as crazy as the Internet bubble in 1999." One can dream, right?

Last Week: Review

Spain Shrinks

Fresh fears about Spain on Friday all but erased market gains notched early in the week on strong corporate earnings. Spain said its economy would contract by 0.5% in 2013 instead of growing 0.2%, as was previously expected, and the Valencia region said that it would seek central government help to repay its debts. The yield on Spain's 10-year bond topped 7%. The Dow Jones Industrial Average ended the week up 45 points at 12,823.

Fed's Lament

In testimony before the Senate Banking Committee, Federal Reserve Chairman Ben Bernanke confirmed that the U.S. economic recovery had slowed, and indicated there is no consensus about what, if anything, should be done to bolster growth. The Fed next meets on July 31.

Too Hot To Shop?

Retail sales dropped 0.5% in June, the third decline in a row. The news prompted some economists to lower their estimates for economic growth. Adding to the grim news: The number of people filing for unemployment benefits rose more than had been expected.

Reprieve on Student Loans

The Obama administration urged Congress to make it easier for people to wipe out some of their student debt by filing for bankruptcy if the loans came from private lenders like SLM Corp.'s Sallie Mae.

Pension Pain

The California Public Employees' Retirement System reported a 1% return for its fiscal year ending June 30. That fell far short of the targeted return of 7.5% and could mean members will have to make larger contributions to the fund. (See Current Yield, "Top Pension Fund Sends a Warning.")

In Brief

• Twelve people were killed by a gunman in a Colorado movie theater.

• Corn and soybean prices have hit new highs as droughts persist in the Midwest.